This invention relates generally to payment card networks and, more particularly, to systems and methods for settling payment card chargeback transactions involving varying currency exchange rates.
When a cardholder uses a transaction payment card to purchase goods or services from a merchant, an acquiring bank reimburses the merchant for the transaction. The acquiring bank then settles those funds with an issuer of the card (issuer) or a third party processor authorized to act on behalf of the issuer by presenting the transaction into a transaction payment card network. In a process known as clearing, transaction data is moved from the acquiring bank to the payment card network and from the payment card network to the issuer. After clearing, settlement occurs, which is a process used to exchange funds between the acquiring bank and the issuer (or third party processor) for the net value of a batch of all the monetary transactions cleared for that processing day. When the acquiring bank and the issuer are located in different countries or use different currencies, the currency where the merchant is located is used, and during settlement, the exchange rate on that particular day is used for the currency conversion.
On occasion, the cardholder may be unsatisfied with the goods or services provided by the merchant, so the cardholder may return the goods or request a chargeback from the cardholder's issuer. Generally, the issuer immediately issues a credit to the cardholder's account for the amount of the transaction. The issuer then sends a chargeback request to an issuer processor, which request is collected with other requests and submitted in a batch to a payment card network. After the batch of chargeback requests and associated transactions are processed by acquiring banks, a reconciliation file is transmitted back to the issuer processor, and then on to the issuer.
However, in such cases, the reconciliation file contains only a total net amount that potentially covers a plurality of chargeback transactions, without identifying individual transactions. The chargeback transactions may have involved the use of currency exchange rates. In such cases, the exchange rates that were applied would have been the rates in effect on the date that each individual chargeback request was submitted. As such, some of the chargeback transactions may result in a gain to the issuer while others may result in a loss. However, because known reconciliation files only provide a net settlement amount, an issuer cannot determine, with respect to individual chargeback transactions, whether a gain or a loss was realized upon receipt of settlement funds from the payment card network. In addition, to address such gains or losses requires manual intervention (per transaction) to reconcile an ‘out of balance’ condition and then the creation of a separate adjustment transaction for the difference.
Accordingly, it is desirable to provide a method and system for providing data representing chargeback transactions to a payment card network for settlement such that when the reconciliation message is received, the issuer processor can associate a settlement amount received from the payment card network with each chargeback transaction received from an issuer, and thus calculate a net gain or loss for each chargeback transaction.